TaxTMI 
TaxTMI 
2019 (6) TMI 1758
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.... who had been appointed of the estate and effects of the Applicants by order dated 6th September, 2017. The facts are similar in the two matters and facts in Notice of Motion No. 8 of 2019 are set out for the sake of convenience. The Petitioning Creditor had advanced a sum of Rs. 25,00,000/- in favour of the company M/s. Tornado Motors Pvt. Ltd. ("the said Company"). In the Affidavit of the Judgment Debtor it is stated that the Judgment Debtor was a Director of the said Company and has thereafter resigned from the Directorship on 29th December, 2014. It is stated that the Petitioning Creditor had advanced a sum of Rs. 25,00,000/- in favour of the said Company in lieu of two bills and exchange of Rs. 12,50,000/- each signed by the husband of the Judgment Debtor. It is stated that Petitioning Creditor has alleged that the said two bills of exchange of Rs. 12,50,000/- each were also signed by the Judgment Debtor as second acceptor. She has disputed her signature on the two bills of exchange and has stated that she was not aware of any transaction taking place between the said Company and the Petitioning Creditor till the year 2016. She has stated that when the....
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....ty Civil Court. Accordingly, the judgment debtor has deposited the entire decretal amount by demand draft dated 9th October, 2018 in the City Civil Court, Bombay within time in compliance with order dated 26th September, 2018. The operation of the exparte order dated 18th August, 2016 came to be stayed till final hearing and disposal of the First Appeal. 3. In the present case, there are orders of adjudication holding the judgment debtors including the judgment debtor who has filed this application as insolvents, which orders are both dated 6th September, 2017. By the said orders, the Official Assignee has been appointed with the usual directions and accordingly, the Official Assignee has sought requisitions from the judgment debtor pursuant to the said order dated 6th September, 2017. On failure to comply with requisitions, the Official Assignee has filed Rule Nisi application which is also before this Court. The present Notices of Motion seek recall and / or setting aside of the orders of adjudication. 4. The learned Counsel for the Applicant has stated that the Petitioning Creditor can only be concerned with the Petitioning Creditor's debt. It is provided under Section....
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.... show that the insolvent was unable to discharge the debts due from him. The prayer for adjudicating the appellant as an insolvent had primarily proceeded on the basis of the failure of the appellant to discharge the decree debt due to the petitioning creditor. At the hearing of the appeal the appellate Bench of the High Court determined on September 23,1964 that the balance amount due from the insolvent to the petitioning creditor was Rs. 46,623.49 paise. The court directed the appellant that if he paid to the petitioning creditor Rs. 28,186.40 p. by 2nd December, 1964 and balance with interest by June 30, 1965, the order of adjudication would be set aside. On the same day i.e. September 23, 1964 the appellant paid to the petitioning creditor Rs. 28,186.49 paise. The balance amount was not paid within the time fixed. For that reason the appellate court confirmed the adjudication of the insolvent by its judgment dated July 12, 1966. There after on July 30, 1966 the appellant's solicitors sent a cheque for Rs. 23,466.06 paise to the solicitors of the petitioning creditors in full satisfaction of the balance due to the petitioning creditor. That cheque was ret....
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....mitted that this undertaking cum indemnity bond furnished by the well wisher of the judgment debtors as well as the application which will be made by the judgment debtors to have the sums deposited with the Registry of the City Civil Court released to the Petitioning Creditors shall be without prejudice to their rights and contention and may not be construed as an acceptance of the decrees passed by the City Civil Court, Mumbai in Special Civil Suit No. 514 of 2006 and Special Civil Suit No. 224 of 2016. 8. He has submitted that in so far as the other claims are concerned and which have been filed before the Official Assignee, these claims have not been proved and are only in respect of summary suits which are pending before the City Civil Court and where there is no order of payment and / or decree passed by the City Civil Court for these claims to come within the purview of Section 9 (2) of the said Act. Hence there can be no insolvency proceedings with respect to these claims which are still to be established and hence the claimants cannot step into the shoes of the Petitioning Creditor and continue the insolvency proceedings under the said Act. He has accordingly, ....
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....ad been passed against the judgment debtors as well. She has further submitted that this Court had noticed that at that stage the decree had not been challenged and thus it was appropriate to declare the judgment debtors as insolvent. She accordingly submitted that the Notices of Motion be rejected. 10. I have considered the rival submission. I have also noticed that the Petitioning Creditor is agreeable to settle his debts with the judgment debtors upon an appropriate application be made by the judgment debtors to the Registry of the City Civil Court for releasing the full decretal amount deposited by them in favour of the Petitioning Creditor. The real grievance of the learned Counsel appearing for the Petitioning Creditor is that the adjudication order dated 6th September, 2017 adjudicating the judgment debtor as insolvent should not be recalled and / or set aside as once an order of insolvency is passed it is an order in rem and would accordingly operate in favour of the other claimants who have filed their claims before the Official Assignee. She has admitted that she is holding a brief for the other claimants as well who seek to adjudicate their claims before the Official ....
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....ignee and which claims arise from summary suits filed in the City Civil Court and from which these are no decrees or orders for payment of money. Hence, these claims before the Official Assignee cannot be continued when the Petitioning Creditor debts are settled in full by the judgment debtor. The Claimants cannot step into the shoes of the Petitioning Creditor. 12. One of the orders which have been relied upon by the learned Counsel for the Petitioning Creditor is an order passed by the learned Judge of this Court (S.J.Kathawalla,J.) on 24th December, 2013 of annulment of adjudication of the insolvent subject to a well wisher executing an undertaking cum indemnity bond in favour of the Official Assignee to settle the claim of the creditors, if any, lodged subsequently with the Official Assignee. One can take support from this order which in fact protects the interest of the claimants who at a future point of time, i.e. after obtaining decrees or orders for payment of money from the City Civil Court in their Summary Suits and such decrees ultimately being made final, the claimants would then be Petitioning Creditors and their debts secured by such undertaking cum indemnity bond.....